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Hong Kong and Singapore are among six economies in Asia that are most exposed to the global recession and will take time to recover, possibly spurring “substantial” job cuts in the countries, according to Nomura International Ltd.
South Korea, Malaysia, Taiwan and Thailand also have been affected by the slump, Rob Subbaraman, chief economist at Nomura in Hong Kong, wrote in a report published today.
“If the six most exposed countries fail to recover quickly, as we expect, firms may have little choice but to reduce their workforces substantially,” Subbaraman wrote, noting that companies may have been holding onto underutilized workers in South Korea, Singapore and Taiwan.
Hong Kong’s jobless rate rose to a three-year high of 5.3 percent in the three months ended April 30 while the rate in South Korea remained at the highest level since 2005 last month. Unemployment in the two countries may rise further, according to the Nomura report.
“All of the main engines of demand — exports, consumption and investment — are spluttering in Asia’s six most exposed economies,” he wrote. “Unlike after the Asian crisis, the region cannot rely on a strong rebound in exports to drive the recovery. Nor is China likely to provide much support.”
The peak-to-trough decline in year-on-year gross domestic product in the six countries is now in the double digits, according to the report. Hong Kong’s economy has posted a 15 percent drop, on a par with the 1997-1998 Asia crisis, while Singapore’s GDP is down 16 percent, Nomura said.